Hawaiian Hospitality Group, Inc. (PINKSHEETS: HHGI) Selling a Dream but Investor may be Disappointed by Reality

Hawaiian Hospitality Group, Inc. (PINKSHEETS: HHGI) hasn’t distributed a press release in three months and only saw 17,500 shares trade hands on Thursday but volume has spiked today, eclipsing the 2.2 million mark by mid-afternoon despite nothing coming from the wedding and corporate event services provider. To the shock of no one, the dramatic rise in trading volume coincides with yet another promotional campaign touting the company’s potential but by all indications that optimistic outlook is simply a mirage. While shares hit a high of 0.0320 earlier in the day they have been on a steady decline, sinking as far down as 0.010, a six month low. Looking at HHGI’s last quarterly report for the period ended September 30, 2011 the financial figures don’t look promising as they reported revenues of $84,183 for the three-month period against expenses of $109,431. According to the company they now have an accumulated deficit of more than $2.4 million, not exactly what shareholders want to see. Additionally troublesome for investors is the fact that HHGI has 5 billion authorized shares while their common shares issued and outstanding rests at nearly 281 million, which means there’s plenty of room for dilution and with the sale of securities as the company’s only real chance at meeting operational costs that dilution looks to be a certainty. HHGI is also sitting on more than 4 million preferred shares which again could further dilute shareholder value. Aside from the fear of further dilution shareholders should be concerned about the fact that HHGI doesn’t list any current assets for the period ended September 30, 2011. As for total assets the bulk of their $5,220,732 comes in the form of equity and other investments totaling $5,000,000 that of course is related to their acquisition of Submersible Technical Services, Inc. which provided them with two personal submarines under development for deep sea diving and fishing. When HHGI filed their quarterly report back in November they stated that they were “nearing completion of its testing phase for its two electric powered submersibles and anticipates revenues from this subsidiary in the second quarter of 2012.” That would be something to look for as an investor but HHGI has provided no new update as to that endeavor. HHGI has two other subsidiaries that they consider “important business arms” of HHGI, Loulu Palm Estate, Inc.; 21st Parallel Catering and Events, Inc. The company has said they have “seen a steady rise in revenues from the activities of these two subsidiaries and a marked increase in the number of events sold throughout the third quarter and going into the next quarter.” As pointed out earlier, HHGI lost money in the third quarter so that “rise” in revenues can’t be that impressive. Right now there is nothing to indicate that HHGI will be anything more than what they are currently. They will continue to rely on the sale of securities to cover costs and shareholders will have a hard to finding value in their investment.